CFPB Guidance Reiterates Changed Approach to RESPA Section 8

The Consumer Financial Protection Bureau issued a bulletin today describing its findings that Marketing Services Agreements are often used as a means to circumvent RESPA’s prohibitions on kickbacks and referral fees under the Real Estate Settlement Procedures Act’s Section 8 provisions. The bulletin describes the federal anti-kickback provisions and sets forth examples from the bureau’s enforcement experience as well as risks faced by lenders entering into these agreements.

The bureau said that it has seen “numerous examples of MSAs from industry whistleblowers that, upon initial review, appear to use MSAs to disguise kickbacks and referral fees.” In response, it added, “certain lenders have dissolved existing agreements and decided that they will no longer enter into MSAs. The Bureau encourages all mortgage industry participants to consider carefully RESPA’s requirements and restrictions and the adverse consequences that can follow from non-compliance.” The bulletin follows several CFPB administrative enforcement actions that have altered the application and reach of the criminal Section 8 provisions under RESPA.

The CFPB described the bulletin as a “non-binding general statement of policy” but insisted that “a more careful consideration of legal and compliance risk arising from MSAs would be in order for mortgage industry participants generally.” ABA is watching the bureau’s activity on RESPA closely given its significant market and compliance repercussions. For more information, contact ABA’s Rod Alba.